Why This Entrepreneur Thinks Uber Drivers Should Be His Employees

Editor’s Note: In this series,The Way We Work, Entrepreneur Associate Editor Lydia Belanger examines how people foster productivity, focus, collaboration, creativity and culture in the workplace.

Scott Absher is among those who believe that “the gig economy has given workers more opportunities, more flexibility and more decision-making,” as he puts it. But he also believes that there are a lot of holes to fill in making sure that this type of work is sustainable.

He co-founded his three-year-old company, ShiftPixy, to help workers patchwork various part-time gigs into a full-time income with the benefits and security of a 9-to-5 job, from workers’ compensation to unemployment, medical, dental and vision insurance and 401(k) plans. For companies, ShiftPixy is kind of like a temp staffing agency that helps to fill open roles quickly, harnessing the power of AI to assess local on-demand labor pools.

The company, which went public just over a year ago, has grown about 20 percent to 25 percent per quarter since, according to the company and analysts. About 70 percent of ShiftPixy’s employees work in the restaurant industry, 30 percent work in the service trades and the remaining 10 percent are in what Absher dubs “emerging independent delivery services,” such as independent contractors that handle Amazon deliveries.

Absher foresees ShiftPixy as a potential solution to the worker classification disputes that plague companies such as Uber, which hire independent contractors and brush off worker protection responsibilities.

“They’d be Uber agents,” he says, “but they’d be our employees.” That’s how ShiftPixy operates for the restaurant workers, janitors and other workers it employs. They work at a given restaurant, for example, but they file a W2 tax form with ShiftPixy. However, ShiftPixy is not at all in talks to forge this type of relationship with Uber and its ilk, due to what Absher describes as a “difference of business philosophy.”

Absher, who has spent his career helping companies comply with labor laws, shared his perspective with Entrepreneur about what gig-economy platforms and their workers have to gain from outsourced hiring, benefits and more.

This conversation has been edited for length and clarity.

1. What was the impetus for ShiftPixy?
The preferences for labor, especially part-time labor, have changed radically. The preference in the way people connect to part-time work has also changed. Now it’s digital. Now it’s more gig-oriented. What hasn’t changed with that is brick-and-mortar companies’ responsibility for what I call “the HR stack.”

Gig platforms have taken this “we’re not an employer” stance, despite the fact that they’re feeding and metering out the work. But just because you’re virtual and you exist behind the digital curtain does not abdicate your employer duties and responsibilities. ShiftPixy is able to leverage that technology, cater to that pivot in preference, but also deliver HR stack compliance.

2. What is most lacking in today’s gig worker ecosystem?
To us, one of the most prominent is workers’ compensation coverage. Let’s say you’re an Uber driver and you’re helping somebody get their suitcase into your trunk. What happens if you tweak your back? In normal work, if you tweak your back, that’s a workers’ compensation coverage issue. If you’re an Uber or GrubHub or any of these gig platform operators and that happens, you’re running solo.

3. Do you foresee gig platforms like Uber being forced to classify its workers as employees in the near future?
I think it’s going to have to happen. You can’t scoff at the law in perpetuity. Companies have limited resources to fight back. Governments don’t. Here are the rules around workers’ compensation: If you have one employee, you need to have it, in all 50 states. If there’s an injury and you do not have it, you have functionally committed insurance fraud.

Number two, if you’re a state, and there’s this movement toward independent contractors, it also means there’s a move away from employer-side payroll taxes going into the system. So how long will cash-starved states like New York, Illinois and California endure the absence of employer-side payroll taxes?

4. Why do you think gig platform companies are so reluctant to classify workers as employees?
It’s a twofold aversion for them: Number one is just pure economics. For every dollar you earn, your employer has another 30 cents on top of that, roughly — in payroll taxes, workers compensation and a few other things.The gig operators, if they earn a dollar, they get a dollar. They don’t want to add that to that.

Aversion number two is, they would have to staff up to administer and maintain those things. So it would mean some sort of HR and processing infrastructure that they may or may not be willing to invest in.

5. What other gaps need to be filled to make work more secure and stable for free agents?
We break out each operator’s shift work, and then we use schedule inefficiencies or dropouts to curate and create opportunities that we present to other people locally available in the system. We use AI to look at who vacated the shift and what their background was, to compare them to people who are locally available and to provide some options.